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Former Treasury Secretaries Lament Budget Politics

Blog Post

By: Steve Winn

Tuesday, September 18, 2012

The most difficult obstacles to fiscal reform efforts are more political than economic, as several speakers emphasized at a Strengthening of America -- Our Children’s Future forum last Wednesday.The country has the strength and capacity to deal with its budget challenges, they said. It is the political will to act that is in question, with many elected officials reluctant to make difficult choices and seek bipartisan cooperation.James A. Baker III, a former Treasury secretary, said that a grand bargain to put the country on a more responsible fiscal path would require “something that’s become a dirty word” in Washington: “Compromise.”Another former Treasury secretary, Robert Rubin, noted the example of the Founding Fathers, who overcame strong disagreements with each other to produce the Constitution through “principled and effective compromise.”Former Senator Sam Nunn (D-Ga.), one of the former senators who convened the forum series, said the group believes “there are feasible and responsible solutions that we can pursue to protect our children’s future, if we work together.”But Nunn, a co-chairman of The Concord Coalition, said elected leaders would have to summon more political courage and engage the public in a “genuine dialogue” about the fiscal challenges and the trade-offs involved.

Many politicians and members of the public who are frustrated with the inability of Congress and the president to make responsible fiscal choices have proposed a seemingly simple solution: Amend the Constitution to require a balanced budget.
While the sentiment behind this idea is understandable, it would be very difficult in practice to compel a balanced budget each year, and attempting to enforce it through the courts would be all but impossible.

A common excuse for inaction on federal deficits is that relative to the size of the economy, they aren’t abnormally large and are projected to stay that way for a few more years. Furthermore, current projections may prove to be overly pessimistic, the argument goes, so what reason do today’s policymakers have to act immediately?

When The Concord Coalition was founded in 1992, the national debt was on a sharp upward trajectory. Yet just five years later, Democratic President Bill Clinton signed legislation passed by a Republican Congress that implemented the first balanced budget in decades. By the time Clinton left the White House, the Congressional Budget Office was projecting a 10-year surplus of over $5 trillion and there was even discussion about whether the national debt could be paid off entirely.